The Israel Tax Authority voluntary disclosure procedure and the related administrative orders enabling anonymous applications and shortened handling of requests will end in 10 days, on December 31, 2016. The procedure has received a large response: 6,000 applications have so far been submitted, worth an estimated NIS 20 billion. With the publication of the procedure, the Tax Authority, with approval of the Office of the State Attorney, has committed not to pursue criminal charges against taxpayers that will be eligible and pay all of the tax required following the disclosure process. The Tax Authority calls on tax payers to use this narrow 'window of opportunity' to report capital not reported in the past.
The Tax Authority published the voluntary disclosure procedure in September 2014, as part of its fight against black money and efforts to uncover unreported capital in Israel and abroad. The last year has seen a leap forward in the Tax Authority's cooperation with foreign tax authorities, after it joined the Multilateral Competent Authority Agreement and due to the expected automatic exchange of information with member states. In addition, the agreement with the US administration for the realization of the FATCA policy, as part of which financial data will be transferred to the US tax authorities and information be provided on Israeli citizens will begin during the first quarter of 2017.
Since the procedure was launched, it was extended, due to the strong response and the legislation enacted indicating that severe tax violations will be considered a predicate offense according to the Prohibition on Money Laundering Law. In addition, earlier this week the Tax Authority announced that following discussions with the Israel Diamond Exchange and the Israel Diamond Manufacturers Association (IsDMA), and the approval of the Ministry of Justice, it formulated adjusted principles aimed at enabling tax-payers from the diamond industry to submit voluntary disclosure applications as part of the procedure that will end on December 31. This is expected to further increase the number of applications.
The procedure includes several administrative orders aimed at encouraging and making starting the procedure easier including an option to submit an anonymous request and submitting it for shortened handling in cases in which the reported capital does not exceed NIS 2 million and the taxable income does not exceed NIS 500,000. Since the procedure was launched, 5,937 voluntary disclosure requests have been filed overall, including 3,471 in the anonymous track, 3,471 in the shortened track and 1,294 in the regular track.
Moreover, taxes totaling NIS 840 million have been collected for applications whose handling has been completed, and overall tax collection forecasts exceed NIS 2 billion. The Tax Authority usually receives 200 voluntary disclosure applications annually.
Published by Globes [online], Israel business news - www.globes-online.com - on December 21, 2016
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